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Does location data matter? Not how you think it does.

Does location data matter? Not how you think it does. David Petersen
By David Petersen, CEO, Sense Networks

Location-based mobile advertising, and its typical application of geo-fencing, is one of today’s hottest mobile marketing’s topics. However, the true power of location is often misunderstood. When it comes to driving ROI through mobile advertising, location often doesn’t matter – at least not in the way you think it does. Instead of simply geo-fencing a static location, the more effective use of mobile location technology considers historical location data and the consumer behavior it reveals.

Smart marketers are implementing “location for lifestyle” targeting strategies as opposed to zeroing in on “location right now tactics.” Sending an ad to a consumer based on their current location often isn’t as powerful as sending mobile ads based on the user’s lifestyle and behavior that analysis of historical location data reveals. In fact, our research has shown that there is no correlation between distance-to-store and mobile ad clicks for retailer brands.

Also, consider that most consumers have their day planned out. They may be walking past a retail location and receive an ad, but they are unlikely to stop what they are doing and immediately head into the retailer to make a purchase – especially if the deal isn’t relevant to them.

Studies show that 80 percent of purchases are planned. Therefore, marketers should deliver ads to consumers about relevant topics beforehand to influence purchasing decisions. By analyzing historical location data, marketers can tell more about a consumer’s lifestyle choices and preferences – fast food junkies, shoe-shopping addict, loyal WalMart customer, etc. – and send them ads based on those preferences.

This reinforces the notion that simple geo-fencing is not an optimal targeting practice on its own. Instead, it is critical to target users based on what location tells us about their behavior. Especially for national brands that have many well-known locations in a metro area, consumers’ historical shopping patterns, demographics and lifestyle will have a greater impact on driving store visit rates (SVRs) and ultimately purchases, than the fact that they are one mile from a retail outlet.

Critics of location-based technology are quick to blame the data, claiming it to be unreliable or inaccurate. While the industry still largely struggles with the quality of location data, the lack of a relationship between a mobile user’s real-time distance to a store and CTRs cannot be explained by “bad location data.” Location data is of varying quality, but even the best location data doesn’t prove valuable in this situation.

Marketers should keep in mind that targeting power comes from understanding what location reveals about the user, not just the location point itself. It is who, not where, that more strongly impacts CTRs and SVRs. The power of mobile location data lies in extracting context and meaning from historical location patterns to interpret meaningful insights about users; not the fleeting, real-time moment that a consumer enters a geo-fence.

As Chief Executive Officer of Sense Networks, David Petersen is responsible for setting the vision and execution path of Sense Networks. Petersen joins Sense following his tenure as Senior Vice President at The Nielsen Company, where he established...

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